Russian economy to collapse in 4 years, Senator says

Russian economy to collapse in 4 years, Senator says

The State Duma member is not happy about the fact that the budget surpluses that rolled in as a result of additional income following the oil and gas sales are being forwarded to the Russian National Wealth Fund.

The State Duma is not happy with the government policy related to concentration of additional income in the National Wealth Fund, and the denial to forward the financial resources to the development of the real economy and social sectors, reports Rosbalt

Spokesmen of the Communist Party of the Russian Federation and Just Russia raised their objections to the matter at the State Duma meeting where iterations of the 2008 federal budget were being discussed in the first reading. With that, Nikolay Arefiev, a State Duma member from the Communist Party, stated that this policy would cause a social and economic breakdown in the country.

“You’re doing your best to drain the money out of the budget, leading the country to crisis. Then, you’re giving some of the money to surmount crisis, and then again, you’re starting draining the money. This cycle, by my calculations, will cause a collapse in the country in 4 years. The country’s economy and social sector will be destroyed because you’re always draining the money.” Arefiev stated. 

The State Duma member is not happy about the fact that the budget surpluses that rolled in as a result of additional income following the oil and gas sales are being forwarded to the Russian National Wealth Fund. 

“You say we’ll eat away this money. So, then what? Why not invest this money into infrastructure projects, and then live and eat with the help of this money.” Arefiev asked Anton Seluanov, a head of the Ministry of Finance. 

Other Duma members raised the similar objections.

“A little over 10 per cent of the additional income is being spent on exigencies; the rest is being “salted away” and forwarded to unknown destinations. Your logic makes sense to me, but anyhow, shall we try another path by spending money on modernization of the economy. This is going to be a more cast-iron guarantee during the political and economic upheavals - unlike the “salted” money that is being kept in Western specialties and foreign currencies which makes the National Wealth Fund vulnerable.” Mikhail Emelianov, a State Duma member from the Just Russia party, voiced his concerns. 

Siluanov replied that the government is leading a responsible budgetary policy. 

“There are two ways: we can either eat away this money and find ourselves left without it, or we can lead a more responsible budgetary policy - the thing we had been doing during these years. The money that had been “salted away” helped us over the past three years. We had been financing commitment with the help of this money. If there had not been this money, I have no idea how we would cope with the commitment.” Siluanov said. 

In his words, if it faces financial struggles, Russia won’t be able to look to other countries for assistance that can only be provided by them on certain political conditions.

International financial organizations won’t give us money, and the usage of the resources of the Central Bank would cause escalation - we can’t borrow these magnitudes. We do need the “salted” money to provide the stability of the expenditures execution.” The head of the Ministry of Finance emphasized.

He gave an assurance that the government is not “skinning a flint.” “This is a responsible policy to carry out tasks given to us by the President and you. As long as we depend on external factors, we have to have certain backups - in case the external factors change - not to depend on the external factors. This is a policy we are pursuing.” Siluanov concluded. 

According to the changes to the 2018 federal budget, next year,  the National Wealth Fund will be refilled with the help of the additional income following the oil and gas sales which earns the country 4.1 trillion rubles this year. Eventually, its volume of the fluid part of the National Wealth Fund will amount to 6.3 trillion rubles or 6 per cent of GDP.  

Tags: State Duma
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